Patents and Innovation Economics

Response to The Economist on Patents

Marshall Phelps wrote an excellent response in Forbes to an anti-patent editorial by The Economist. The article is entitled Do Patents Really Promote Innovation? A Response To The Economist. He provides overwhelming evidence that patents are the driver of new technologies. I and others have shown that the reason the industrial revolution occurred when and where it did was because of the introduction of the first practical patent systems, i.e., property rights for inventions. The article also points out that the most inventive countries are those with the strongest patent systems and these countries also have the greatest technology dispersion. The article also points out that the patent system encourages the dissemination of information about technologies, which has been shown empirically and logically. It is time the anti-patent crowd admit that their position is a matter of faith, not logic an evidence.

I have one beef with the article when it says you cannot prove that patents lead to more inventions and you cannot prove a free market (with patents) leads to economic growth. Both of these have been shown empirically and the causal connection is clear. Property rights ensure that the creator benefits from their creation. People have to work to live and when the product of their work is stolen from them, they cannot be as productive. For more see my book Source of Economic Growth and my talk at Atlas Summit 2015.